What is a Factoring Company and How Does It Work?
In the fast-paced world of trucking and logistics, cash flow is crucial to keeping operations running smoothly. But waiting for payments from brokers and shippers can often take 30 to 90 days, which can lead to financial strain for carriers, owner-operators, and trucking companies. That’s where factoring companies come in to help bridge the gap.
What is a Factoring Company?
A factoring company is a financial service provider that helps businesses maintain steady cash flow by purchasing their unpaid invoices at a discounted rate. This process, known as factoring, allows carriers to receive immediate payment for their freight invoices rather than waiting weeks or months for their clients to pay. In essence, factoring companies help trucking companies manage their cash flow, pay for expenses like fuel, repairs, and payroll, and continue growing their business without delays.
How Does Factoring Work?
Here’s a step-by-step overview of how the factoring process typically works:
- Deliver Freight & Create Invoice: After completing a load, you send an invoice to the broker or shipper.
- Submit the Invoice to the Factoring Company: Instead of waiting for the broker or shipper to pay, you send the invoice to your factoring company, along with any relevant documents, like the bill of lading.
- Receive Immediate Payment: The factoring company advances you a percentage of the invoice’s total value, typically between 80% and 95%. This cash is made available to you right away, helping you cover operational expenses.
- Factoring Company Collects Payment: The factoring company waits for the broker or shipper to pay the full amount of the invoice. Once they receive payment, they release the remaining balance to you, minus a small factoring fee.
Benefits of Working with a Factoring Company
- Improved Cash Flow: With factoring, you don’t have to wait for customers to pay. You get your money upfront, which keeps your business moving.
- Reduced Risk: Factoring companies often handle the credit check and collection process, helping you avoid non-paying customers.
- Focus on Growth: With a steady cash flow, you can focus on growing your business, taking on more loads, and expanding your fleet without worrying about day-to-day finances.
Dexter Dispatch Services LLC Partnership with Top Factoring Companies
At Dexter Dispatch Services LLC, we understand the importance of working with trustworthy factoring companies. That’s why we’ve partnered with two of the leading factoring companies in the industry: OTR Solutions and RTS Financial.
OTR Solutions is renowned for its flexible and fast factoring services, helping carriers of all sizes maintain a stable cash flow. With a transparent fee structure and excellent customer service, OTR Solutions ensures that your business runs smoothly.
RTS Financial is another top-tier factoring provider that offers competitive rates and a streamlined process to help carriers get paid faster. Their strong reputation and years of experience in the industry make them an ideal partner for trucking companies looking to optimize their cash flow.
By partnering with these two reputable factoring companies, we ensure that our clients have access to the financial tools they need to keep their operations running smoothly and profitably. Whether you are an owner-operator or managing a fleet, working with Dexter Dispatch Services LLC means you benefit from our official setup with OTR Solutions and RTS Financial, ensuring fast, reliable payment for your loads.
Conclusion
Factoring is a game-changing solution for carriers, owner-operators, and trucking companies that want to maintain a healthy cash flow without the hassle of waiting for long payment terms. At Dexter Dispatch Services LLC, we’ve partnered with OTR Solutions and RTS Financial to provide you with seamless factoring solutions, so you can focus on what you do best—driving and delivering.
If you’re interested in learning more about how factoring can benefit your business, or if you’d like to take advantage of our partnerships with OTR Solutions and RTS Financial, contact us today. We’re here to help your business thrive!
